Nvidia Corp (NASDAQ:NVDA) has already cemented its dominance in AI. Still, JPMorgan analyst Harlan Sur sees the chip giant poised for even bigger gains – potentially outgrowing overall data center spending.

With AI factories emerging as wildcards and inference demand set to explode, Nvidia might be sitting on an untapped goldmine.

Nvidia's Next-Gen AI Advantage

At its recent financial analyst event, Nvidia laid out its roadmap, emphasizing its holistic ecosystem spanning silicon, hardware, software, and a developer base that dwarfs its competition.

While rivals are still chasing Nvidia's last-gen Hopper GPUs, the company is already rolling out its next-gen Blackwell architecture—promising a staggering 40x performance improvement.

Sur believes this head start, combined with Nvidia's unrivaled software stack, positions it to dominate AI inference, which could account for 90% of the market in the long run.

The AI Factory Wildcard

One of the biggest wildcards? AI factories.

While Nvidia's projections already factor in data center spending, Sur notes that AI factory investments – potentially worth hundreds of billions – aren't even included in those forecasts yet. If this sector takes off as expected, Nvidia's upside could be even greater than current estimates suggest.

Strong Margins And Market Position

Meanwhile, custom AI chips from competitors may offer cost savings, but Sur argues that Nvidia's total cost of ownership advantage and revenue-generating potential give it the upper hand. While others scramble to optimize their ASIC solutions, Nvidia continues to integrate its hardware and software seamlessly, making adoption far easier for enterprises.

Despite the complexity of transitioning from Hopper to Blackwell, Nvidia expects to stabilize its architecture over the next three to four years, improving margins while maintaining its aggressive lead. With gross margins projected to hit the mid-70% range, the company looks well-positioned to sustain its dominance in AI.

JPMorgan remains bullish, reiterating an Overweight rating on Nvidia stock with a price target of $170 by year-end 2025.

With data center spending accelerating, AI factories emerging and inference demand surging, Nvidia's growth story may still be in its early chapters.